Energy bill threatens price and supply of electricity, consumer groups warn

Washington, DC, September 26, 2002 — Twenty-nine national and state consumer groups called on Congressional Energy Bill conferees Wednesday, urging them to heed the warnings previously expressed by state and local regulators.

The consumer groups stated in a letter to the conferees, “The policies inherent in the Electricity Title seriously threaten the price and supply of electricity for consumers across the nation.”

The letter cites two key provisions: the repeal of the Public Utilities Holding Company Act (PUHCA) and the extension of FERC authority to include public and cooperatively owned utilities. Many of the systemic abuses of the electricity market since restructuring began in the late 1990s could have been prevented if PUHCA had been vigorously enforced, the groups allege.

“PUHCA was designed to prevent all of the abuses in which Enron and the other merchant generators engaged,” the letter stated. “In fact, PUHCA was enacted in large part as a reaction to industry abuses in the early days of the industry.”

“Properly implemented, PUHCA would require simplified structures, examine accounting practices, review affiliate transactions, and restrict diversification by requiring direct functional relationships between activities.”

The groups’ letter, in concurrence with the Consumer Federation of America’s study “All Pain No Gain” released last week, urges federal policymakers to turn back from restructuring and deregulation, arguing that PUHCA must be strengthened and invigorated, not repealed, before any further market restructuring should even be considered.

“In light of the current revelations regarding market manipulation and blatant fraud that have occurred in state markets that have been deregulated, PUHCA must be strengthened and invigorated, not repealed, before any further market restructuring should even be considered,” the letter urged. “Yet, federal policy is rushing toward radical restructuring and deregulation.”

PDF format copies of the CFA study can be found at: http://www.consumerfed.org/allpain.pdf.

The groups that signed the letter included:
Consumer Federation of America
Consumers Union
USPIRG
CALPIRG
CoPIRG Florida Consumer Action Network
IowaPIRG
Massachussetts Consumers’ Council
MontPIRG.
North Carolina Consumers Council, Inc
PennPIRG
Consumers Union – Texas Regional Office
VPIRG (Vermont)
Arizona Consumers Council
Democratic Processes Center (AZ)
Citizen Action/Illinois
Consumer Federation of California
ConnPIRG
FloridaPIRG
MassPIRG
PIRGIM (Michigan)
Michigan Consumer Federation
NMPIRG
OSPIRG (Oregon)
Oregon Citizens’ Utility Board
Wisconsin Citizens’ Utility Board
PennEnvironment
Virginia Citizens Consumer Council
WashPIRG

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